Cap on unlimited income tax reliefs

Granny tax, pasty tax and fuel fiasco has over shadowed what I consider to have the most far reaching impact on how our income tax system operates.

At present individuals can offset almost unlimited amount against income to arrive at income liable to income tax. This results in an individual pays not tax at all even if his total earnings are in millions of pounds.

This is likely to change from 6 April 2013 when a cap would be placed on how much can be offset against income to arrive at income for tax purposes. The cap will apply only to reliefs which are currently unlimited. And will be set at 25 per cent of income or £50,000, whichever is greater.

The reliefs likely to be affected are:

loss reliefs claimable against total income;

qualifying loan interest reliefs;

reliefs for charitable donations; and

miscellaneous small reliefs which are currently uncapped.

Some of the reliefs not likely to be affected are:

Reliefs for double taxation such as foreign and dividend tax credits and notional tax on life insurance gains.

Categories

Meta

Please donate

Please donate handsomely to cover the costs of running this website.

Your donation which will only take a few minutes to complete, will help us keep this site operational, and to thank you for your generosity you will be entered into a prize draw to win a meeting with David Cameron, Prime Minister of United Kingdom, Mrs Samantha Cameron (obvious who she is) and George Osborne (Chancellor of the Exchequer) and your photo taken for your collection.